In the ongoing quest to unearth the few remaining 100% home loan options, I wrote a recent article about VA loans called 100% Financing: Focusing on VA. Since then, I have been asked numerous times whether or not a veteran can have two VA loans.
The answer is yes and yes. Now I know that the question above refers to two VA loans and not two questions, so let me explain the two yes answers. As most lenders and veterans already know, a veteran can have two VA loans in succession. Once a VA loan has been paid off and the property sold, VA eligibility is reinstated and reusable. On a one time basis, a veteran can even pay off the VA loan while retaining the property.
But the second part of that question is much more interesting. (va housing)
Can a Veteran Have Two Concurrent VA Loans?
In this down market, it is not unusual for a homeowner to want to buy a new home while waiting until the market improves before selling the current home. So can the veteran purchase a second using her VA entitlement while retaining the first?
Yes, often they can. The key is how much of the entitlement was used to buy the first home. As I stated in my previous VA post, the maximum amount of the entitlement shown on each veteran’s Certificate of Eligibility is $36,000. That represents a 25% VA guarantee on the old $144,000 loan amount. But those figures are obsolete. There is a bonus entitlement of $68,250 available to the veteran buying a home valued at more than $144,000. The two entitlement amounts total $104,250 which is 25% of the current conforming loan limit of $417,000. Got it?
Let’s look at how this worked out for a recent client of mine.
Example
A recent client of mine bought a home 8 years ago in Southern California for $120,000. Of his available $36,000 entitlement, he used only $30,000 (25% of the $120k). He came back to Sacramento recently from overseas duty and wanted to buy a $290,000 home while retaining the SoCal financed home as a rental.
Because the price of the new home exceeds $144,000, the veteran has 6,000 remaining of his original entitlement plus the bonus entitlement of $68,250. That total ($75,250) equals 25% of $297,000, so he has enough remaining entitlement to cover the full cost of the new home. He could buy a more expensive home by simply making up the difference in cash.
As more veterans return home, questions about VA are arising more frequently. My next post will focus on CalVET loans, available here in California.
Leave your questions or comments below, and join in the conversation!
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